CH 02

Use with International Human Resource Management ISBN 1-84480013-X
Published by Thomson Learning Peter Dowling and Denice Welch

2/1
Chapter 2
The organizational context


2/2
Chapter objectives
structural responses to international growth
control and coordination mechanisms
(cont.)
In this chapter, we examine how international growth places
demands on management, and the factors that impact on how
managers of internationalizing firms responds to these
challenges. We start with the premise that the human resource
(HR) function does not operate in a vacuum, and that HR
activities are determined by, and influence, organisational
factors. We cover the following areas:


2/3
Chapter objectives (cont.)
mode of operation used in various international markets
effect of responses on human resource management
approaches and activities.
It builds upon material covered in Chapter 1 to provide a
meaningful global and organizational context for drawing out
the international dimension of human resource management
the central theme of this book.


2/4
Figure 2-1: Management demands of international growth


2/5
The path to global status
Causes structural responses, due to:
Strain imposed by growth and geographical
spread
Need for improved coordination and control
across business units
The constraints imposed by host-government
regulations on ownership and equity
Evolution path common but not normative


2/6
Figure 2-2: Stages of internationalization


2/7
Stages of internationalization:
Exporting
Typically the initial stage of international
operations
Usually handled by an intermediary (foreign
agent or distributor)
Role of HR department unclear at this stage


2/8
Figure 2-3: Export department


2/9
Sales subsidiary
Replacing foreign agents/distributors with own
through sales or branch offices/subsidiaries
May be prompted by:
Problems with foreign agents
More confidence in international activities
Desire for greater control
Give greater support to exporting activities
PCNs may be selected, leading to some HR
involvement


2/10
Figure 2-4: Sales subsidiary


2/11
International division
Creation of a separate division in which all
international activities are grouped
Resembles miniature replica of domestic
organization
Subsidiary managers report to head of
international division
Objectives regarding foreign activities may
determine approach to staffing of key positions
Expatriate management role of corporate HR


2/12
Figure 2-5: International division


2/13
Global product/area division
Strain of sheer size may prompt structural
change to either of these global approaches
Choice typically influenced by:
The extent to which key decisions are to be
made at the parent country headquarters or at
the subsidiary units (centralization versus
decentralization)
Type or form of control exerted by parent over
subsidiary


2/14
Figure 2-6a: Global product division Figure 2-6b: Global area division


2/15
The matrix
An attempt to integrate operations across
more than one dimension
Violates Fayols principle of unity of
command
Considered to bring into the management
system a philosophy of matching the
structure to the decision-making process


2/16
Figure 2-7: The matrix


2/17
Problems with the Matrix
Bartlett and Ghoshal
Dual reporting

Proliferation of
communication
channels
Overlapping
responsibilities
Barriers of distance,
language, time and
culture

Leads to conflict and
confusion

Creates informational logjams

Produce turf battles and loss of
accountability

Make it virtually impossible to
resolve conflicts and clarify
confusion


2/18
Beyond the matrix
Less hierarchical structural forms
Heterarchy
Transnational
Networked firm


2/19
Figure 2-8: The networked organization


2/20
Figure 2-9: US, European and Japanese structural changes


2/21
Control mechanisms
Globalization brings considerable challenges
which are often under-estimated.
Every morning when I wake I think about the
challenges of coordinating our operations in
many different countries

Quote by Accor CEO


2/22
Figure 2-10: Control mechanisms


2/23
Mode of operation and HRM
Not just subsidiary operations
Firms may also adopt contractual modes
Licensing
Franchising
Management contracts
Projects
And/or cooperative modes (such as joint
ventures)


2/24
Figure 2-11: Linking operation mode and HRM


2/25
Interfirm linkages
Alliance (strategic alliance, cooperative
venture, collaborative venture or corporate
linkage)
A form of business relationship that:
Involves some measure on interfirm integration
Stops short of a full merger or acquisition


2/26
HR factors
HR issues and activities that affect the
successful functioning of international joint
ventures include:
Assigning mangers to the joint venture
Evaluating their performance
Handling aspects pertaining to career path
Compensation benefits


2/27
Chapter summary
The organizational context in which IHRM activities take place.
Different structural arrangements have been identified as the firm
moves along the path to multinational status from export department
through to more complex varieties such as the matrix, heterarchy,
transnational and networked.
Control and coordination aspects. Formal and informal mechanisms
were outlined, with emphasis on control through personal networks
and relationships, and control through corporate culture, drawing out
HRM implications.
(cont.)
The purpose of this chapter has been to identify the HR implications of the
various options and responses that international growth places on the firm.
This chapter focused on:


2/28
Chapter summary (cont.)
The various modes such as wholly owned, franchising, management
contracts and international joint ventures used by multinationals for
foreign market entry and expansion. Again, we attempted to
demonstrate the IHRM implications of these various modes, although
noting that most of the literature focuses on wholly owned subsidiaries
and international joint ventures.
(cont.)


2/29
How international growth affects the firms approach to HRM. Firms
vary from one another as they go through the stages of international
development, and react in different ways to the circumstances they
encounter in the various foreign markets. There is a wide variety of
matches between IHRM approaches, organizational structure and
stage of internationalization. For example, almost half the US firms
surveyed by Dowling55 reported that the operations of the HR
function were unrelated to the nature of the firms international
operations. A study of nine subsidiaries of multinationals operating in
Ireland by Monks56 found that the majority adopted a local approach
to the HR function, with headquarters involvement often limited to
monitoring the financial implications of HR decisions.
(cont.)


2/30
Stages of development, organizational forms and mode of operation
should not be taken as normative. Research does suggest a pattern and
a process of internationalization but firms do vary in how they adapt to
international operations we use nationality of the parent firm to
demonstrate this.
Through the approach taken in this chapter, we have been able to
demonstrate that there is an interconnection between international HRM
approaches and activities and the organizational context and that HR
managers have a crucial role to play. In order to perform this role better, it
would seem important that HR managers understand the various
international structural options along with the control and coordination
demands imposed by international growth and the HR implications that
accompany the range of operation modes outlined in this chapter.

CH 02

Încărcat de

Informații document

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

CH 02

Încărcat de

Drepturi de autor:

Formate disponibile

Use with International Human Resource Management ISBN 1-84480013-X

Published by Thomson Learning Peter Dowling and Denice Welch

S-ar putea să vă placă și